Historically, credit card companies and banks have banned merchants from charging fees to cover businesses' processing costs. Since January, the card surcharges have been allowed under a settlement agreement between retailers and Visa, MasterCard and certain banks.

The $7.25 billion settlement, which has not yet received final approval, is the result of a class-action antitrust lawsuit in which merchants contended they had to pay excessive "swipe fees" due to a conspiracy among card companies and banks.

“As new credit card surcharge rules take effect, it’s important to ensure consumers are well informed,” Michigan Attorney General Bill Schuette said in a statement. “Retailers are now permitted to charge new fees to MasterCard and Visa cardholders, but they must post notices and follow strict guidelines if they choose to collect the fees.”

Merchants must meet certain requirements if they impose a surcharge on credit card purchases:

• Retailers must post a notice at the entrance of their stores and at the point of sale.

• The retailer has to disclose the surcharge percentage and explain the fact that the charge is being imposed by the retailer (not the credit card company) and does not exceed the amount the retailer pays to accept credit cards.

• Receipts need to show the dollar amount of the surcharge.

• Online merchants must alert consumers that a surcharge will be imposed on the webpage where credit cards are first mentioned.

“The rule of thumb is this – you can’t gouge your customers, and you can’t hide the fees,” said Trish Wexler, spokeswoman for the Electronic Payments Coalition, which represents banking and financial institutions, including Visa and MasterCard.

Merchants can only charge what they pay to process the card, which is generally 1.5 percent to 3 percent of the transaction. Surcharges can’t exceed 4 percent of the purchase price.

The processing, or swipe fees that retailers pay credit card companies vary depending on the average transaction amount at the store, the amount of risk associated with the transaction and the type of card used, according to Amy Drumm, legislative coordinator for the Michigan Retailers Association (MRA).

Charges that may be imposed on consumers also can vary based on the type of credit card. Rewards cards, for example, tend to cost the retailer more to process. Merchants also can offer discounts for using cash or certain kinds of cards. They cannot charge fees for debit card or pre-paid card transactions.

Widespread surcharges not expected

A number of obstacles will likely prevent most merchants from charging any fees, according to the National Retail Federation.

Surcharges are already banned in 11 states.

And the NRF said that retailers that also accept American Express would not be allowed to surcharge Visa or MasterCard purchases based on the settlement rules. But the Electronic Payments Coalition disputed that and said that's not the case.

Though major retailers aren’t expected to impose any surcharges, some smaller mom-and-pop shops have done so, said Joe Ridout, spokesman for advocacy group Consumer Action in San Francisco.

Ridout advises customers faced with a surcharge to tell the merchant it’s a deal breaker.

“Leave your cart in line and go shop somewhere else,” he said.

Wexler, from the Electronic Payments Coalition, said the only fair way to charge a fee is to first lower prices across the board by the amount of the fee, and then only impose the surcharge on credit card transactions.

“Otherwise, it’s double dipping,” she said in an email. “Merchants have already built this business expense into their prices long ago. It’s not fair to have credit card customers pay for this twice.”

The retail price of a product is set by a number of market-driven factors including supply, the price of gas, operation costs and competition. The swipe fees that retailers pay credit card companies make up a relatively small portion of the cost of any one item, according to the MRA.

“Many retailers use competitive price structures that price match within the market, which helps to keep prices lower for customers,” the MRA’s Drumm said in an email.

The MRA contends the bills are unnecessary and that the market can regulate itself. The group posted on its website that the House bill appears to be dead.

Schuette has not taken a formal position on the bills.

The Better Business Bureau can accept complaints of retailers who don’t properly disclose the surcharges.

You also can send complaints to the Michigan attorney general’s consumer protection division at P.O. Box 30213 Lansing, MI 48909, or call 877-765-8388. Online complaint forms are available at www.michigan.gov/ag.